There are a number of configurations in Astute which support the management of Annual Leave. You’ll need to understand all aspects of these configurations to ensure that the system is set up to correctly calculate your employees’ leave.
A major complexity with Annual Leave in New Zealand is determining how employees should be allowed to take leave. Some key considerations for configuring Annual Leave are outlined below.
When is an Employee Entitled to Accrue Leave?
After the end of each 12 months of continuous service, an employee is entitled to no less than four weeks of paid Annual Leave.
You can configure the Accrual Method for your Annual Leave category to identify when an employee is entitled to accrue Annual Leave.
Setting the Accrual Method as ‘NZ Annual Lump Sum’ will allocate a single lump sum amount of annual leave entitlement to an employee, once per year.
The system will use the Gap In Continuous Service value that you set and either the employee’s last entitlement date to determine when an employee’s next 12 months of continuous service is met and they should accrue additional leave.
- The Gap in Continuous Service is a value in days used to confirm the point at which continuous service ends, to confirm an employee’s eligibility for Annual Leave. It is broken when an employee doesn’t work for the specified number of days or longer.
- The last entitlement date is the last date that the employee received a lump sum leave accrual. If there is no last entitlement date, the Start Date for Annual Leave in the employee’s Leave tab is used.
Clearing Holiday Pay
Holiday Pay and Annual Leave are separate categories in Astute. An employee’s Holiday Pay balance will convert into Annual Leave after each period of continuous service.
When you configure your Annual Leave category, the Accrual Method section includes a Clear Leave Type drop-down field. Selecting Holiday Pay here will clear an employee’s Holiday Pay balance when they receive an Annual Leave accrual.
Holiday Pay accrual will then restart for the next 12 month period.
How Much Leave Should an Employee Accrue?
The Astute system reports Annual Leave in hours or days rather than as a dollar value like Holiday Pay.
When calculating Annual Leave accrual, the Astute system will define a ‘week’ for an employee based on the Entitlement Amount settings you configure for your Annual Leave category.
- ‘Fixed’ allows you to enter a set value. The amount you enter here will apply when the employee is entitled to accrue leave, regardless of the hours worked by an employee.
- eg when an Employee becomes entitled to leave, they get a fixed amount of 160 hours, irrespective of the hours they usually work throughout the year.
- ‘Calculated’ will apply a system calculation that uses the employee’s existing pay data to determine their entitlement.
If you select ‘Calculated’, you’ll have five options to determine how the system will calculate your employees’ Annual Leave entitlement.
|Expected Work Week
|Total Hours Worked
|4 Week Average
|52 Week Average
|Greater of 4 or 52 Week Average
Leave Accrual in Days
When the Entitlement Type for an Annual Leave category is set to 'Days', the leave entitlement value will be calculated in days.
A Day is considered worked if any of the Pay Items that have been included in a leave category’s calculation is paid to an employee for that day. Please note that if an employee is paid multiple relevant pay items on the same day, the system will only count this as one day worked.
The Total Days Worked is calculated by totalling the number of days where one or more of the selected Pay Items are paid within the period.
When the Entitlement Amount is set to Calculated, the accrual calculation will depend on which method is chosen in the dropdown list.
- 4 Weeks Average = Number of Days Worked in in the last 4 weeks / 4 Weeks x Entitlement Multiplier
- 52 Weeks Average = Number of Days Worked in the last 52 weeks / 52 Weeks x Entitlement Multiplier
- Expected Work Week = employee’s Full Time Week worked days x Entitlement Multiplier
- Total Time Worked = Number of Days Worked in 52 weeks x Entitlement Multiplier
For example, an employee’s anniversary date is 10 March and they should accrue 4 weeks of leave entitlement (ie the entitlement multiplier). The system determines that their Total Days Worked in the last 52 weeks (from 11/3 the previous year to 10/3 this year) is 214, and their Total Days Worked in the last 4 weeks (from 10/2 to 10/3) is 19 days. Their 4 Week and 52 Week Average leave entitlements will calculate as:
- 4 Weeks Average = 19 / 4 x 4 = 19 days
- 52 Weeks Average = 214 / 52 x 4 = 16.50 days
Leave entitlement will round to the closest quarter.
What Rate is Used when Leave is Being Paid?
Employees can request periods of leave to be taken from the Annual Leave entitlement that they have accrued. The request can either be made on a timesheet (if leave is enabled on timesheets) or via a leave request.
The calculation of the rate paid when an employee takes leave is managed in the leave category, by setting the Rate Calculation Method. You can:
- enter a Multiplier, which will calculate the rate as the Pay Item assigned to the leave category multiplied by the Multiplier; or,
- select a Dynamic Rate, which will calculate a rate depending on the option you choose.
Taking Annual Leave in Advance
If employees are allowed to take annual leave in advance of entitlement, you can manage this in one of two ways in your portal: either using the standard Annual Leave category or creating an additional Annual Leave in Advance category.
In addition to the above configuration options for managing leave in advance, you can set a Negative Threshold to control how much leave an employee can request in excess of their available balance.
The Negative Threshold options are:
|Leave requests can be submitted without restriction. If the request exceeds the employee’s available balance, the balance will become a negative value
|Unlimited with warning
Leave requests can be submitted without restriction, except that both the employee and Approver will receive a warning message that a request will result in a negative balance
Allows you to submit leave requests that will result in a leave balance up to a specified limit. If a leave request will exceed the limit you set, it cannot be submitted
Leave requests cannot be submitted if there is an insufficient available balance to cover the requested hours.
Negative Thresholds are set in the leave category and can’t be customised at an employee level. If employees require different Negative Threshold settings, you will need to configure separate leave categories for each requirement.
Leave Submission Method Controls
You can control the amount of leave that your employees can request by setting limits on the Annual Leave category. These limits can be configured separately for the three different methods of leave submission: in a leave request, on a fixed timesheet, or on a variable timesheet.
Creating an Annual Leave Category
To create an Annual Leave category:
Go to Config > Leave > Add New Leave Category > select a region > Create new Leave Category.
Enter a Leave Category Name and a Common Name if required. If your portal includes multiple regions, you may like to include the region in the Leave Category Name (eg Annual Leave - NZ)
Tick the Enabled checkbox to make the leave category available to assign to employees.
Set the Accrual Method as NZ Annual Lump Sum, as the entitlement value is converted as a single amount once per year.
Enter the Gap in Continuous Service value. This is the number of consecutive days (including weekends) you allow an employee to be absent before you consider their continuous service with your company to be broken.
Select Holiday Pay in the Clear Leave Type drop-down. This will reset the existing Holiday Pay balance when the accrual converts across to Annual Leave as a lump sum entitlement.
Set the Entitlement Type, using the Fixed or Calculated method you prefer.
If you allow employees to take annual leave in advance of their entitlement using a separate leave category and wish to offset the leave taken, you can choose the applicable leave category that needs to offset the Annual Leave (Accrued) value.
Note: Both leave categories in this case must have the same Entitlement Type (ie both in hours or both in days).
For example, an employee becomes entitled to 160 hours of annual leave on 1 March. Prior to this, they take 80 hours of leave which is paid out using the Annual Leave in Advance category. By selecting to offset Annual Leave (Accrued) with Annual Leave in Advance, the employee ends up with 80 hours of entitlement on 1 March, as they've already taken 80 units in advance of their entitlement.
Select the Rate Calculation Method as either Multiplier or Dynamic Rate. If you select Dynamic Rate, you will need to nominate which calculation will be used to determine the rate paid when leave is taken.
Set the Pay Item and Charge Item, if applicable.
Set a Negative Threshold and Spend Control, if relevant.
Enter the GL Income and Expense Account Codes.
Tick the checkboxes to manage the settings for leave submission and leave balance visibility.
To enable employees to submit leave requests for partial days, you will need to tick ‘Allow direct submission on variable timesheet’.
Set the Display Order value.
- Select the Pay Items that should be considered as part of the accrual calculation. If a pay item that is ticked here is paid to an employee, the units (hours or days) that were paid using this pay item will be included when calculating the accrual.
Accrue Annual Leave in Days
The Entitlement Type that you set when configuring a leave category will determine the units that the leave accrual is measured in.
To accrue annual leave in days, you will need to ensure that you have set the Entitlement Type as ‘Days’. When this option is selected, you will be able to select the relevant Pay Items and Leave Items to include in the accrual calculation in the Accrual section.
This calculation differs from how an hourly accrual is calculated, as you will be able to select which Pay and Leave items to include.
If a NZ Annual Leave item is set to days, shift blocking in timesheets will be removed. This means that employees are able to create multiple timesheet items on the same day and time, if the Annual Leave Item is selected on that day.